Service Providers: Partners of Today (Not the Future) for VMware
By Beth Vanni
Many channel pundits agree that service providers are the channel segment to watch for innovation in cloud services delivery. Whether they’re coming from an existing MSP business model, a telco-carrier profile or a built-on-the-cloud orientation, vendors have been shifting their field teams, pricing models and technical support to help these providers be set up for cloud success.
VMware started beating this channel drum about 24 months ago in a big way. And, at this year’s Partner Exchange event, it seems this community (labeled VSPPs by VMware) is a key pillar of VMware’s cloud partnering strategy aimed at helping it compete for partner investment and mindshare against its more traditional enterprise software competitors.
Now boasting a rank of more than 1,500 service providers globally, VMware has attracted quite a diverse community to this program. Everyone from CSC, Verizon/Terremark and ACS down to more niche players like Hosting.com, Bluecloud, iLand and Colt Technology Services, has jumped on the virtualization-to-cloud infrastructure journey bandwagon. Newest to the VSPP ranks and announced this week is AT&T. There are also a host of traditional infrastructure VARs (for lack of a better term) like Logicalis and CDW who have formed divisions that are part of this program.
As the company has evolved its own customer segmentation and recently reorganized its management teams, service providers have commanded their own formal market segmentation, right alongside the company’s legacy enterprise and newly re-energized SMB/commercial segments. Scott Aronson, the newly appointed SVP of global channels and alliances, owns this segment and has a dedicated team focused on marketing, enablement and field execution.
The transactional model with these providers is a new one for VMware, and is based on a consumption-based licensing model. So it’s largely a sell-in model, as is the case with many other infrastructure hardware and software vendors with such partners. However, the VSPP program also offers a relatively extensive set of go-to-market support for these providers, many of whom are actively trying to build their own downstream ecosystems of ISVs and partners.
VMware’s Andy Hunt, vice president of partners and general business for EMEA, raves about the impact these service providers are having in his region. With more than a 250 percent year-over-year revenue increase in fiscal year 2011, Hunt sees these players as strategic to his partner ecosystem, especially in the SMB space, in the coming year. Colt Technology Services seems to be pulling ahead of the pack in terms of building its own partner engagement models and program, whereas iLand seems to be the frontrunner in the U.S. focused on engaging other VMware partners as agents and resellers. iLand was recognized as the VSPP Partner of the Year at this year’s event.
As VMware has grown and quickly diversified its partner community, the company is wisely working hard to foster relationships between these service providers and their traditional solution provider community. Carl Eschenbach, VMware’s co-president of customer operations, noted in his keynote, “We highly encourage you to seek out the right strategic alliances among our service provider community here at this event." In fact, there are private 1:1 collaboration sessions orchestrated here at Partner Exchange between the company’s leading solution providers and service providers – dubbed “speed dating" exchanges. Without dictating engagement and transactional models, VMware is trying to suggest ways the service providers can move from informal, one-off deal-making with individual solution providers to formal, channel-program support models.
It will be interesting to see if VMware can continue to invest what it will take to make these solution providers critical components of its long-term channel strategy. That includes being patient enough to wait for other VARs and technology partners to engage with them and leverage the cloud-selling models and infrastructure they’ve already built. No doubt VMware has a broad portfolio of infrastructure, end-user applications and management tools for the providers to build a practice around. The proof will be how well the virtualization giant embraces them in their direct and indirect selling motions and supports their sales and marketing evangelism of the customers’ “journey to the cloud."
Beth Vanni is vice president of PatherPath (formerly Amazon Consulting). Please contact her at email@example.com.